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2016 (3) TMI 619 - CESTAT MUMBAI

2016 (3) TMI 619 - CESTAT MUMBAI - TMI - Rejection of Cenvat Credit availed only on the ground that section 66A has not been specified in Rule 3 of CENVAT Credit Rules - denial of an amoun being the Cenvat Credit for the period prior to 18.04.2006 citing that Section 66A was brought into the statute book with effect from 18.04.2006 and there was no charge of service tax on the services received from outside India prior to 18.04.2006 - payment of service tax under reverse charge mechanism in case .....

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vant provision of CENVAT Credit Rules, 2004 and credit of tax paid on imported services should be allowed if they are in the nature of input services. Further in this case the tax was paid under Section 66 of the Finance Act, and hence the credit is admissible to the appellant. Further as per the department impugned order though the tax itself was not required to be paid then in that case credit is nothing but a refund of the tax erroneously paid by the appellant in their Cenvat Credit account. .....

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mstances of the present case. Further, in this case extended period cannot be invoked as the appellant have been disclosing the credits in their ER-1 returns and they were under a bonafide belief that they are liable to pay tax in terms of Rule 2(1)(d)(iv) and also entitled to take credit and the issue involved in the present case was with regard to interpretation of statutory provision and moreover the ld. Commissioner has also not given any finding that the appellant have suppressed anything f .....

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re of different type of electrical insulators registered with the Central Excise department. The appellant is also registered with the service tax department for the category of 'Business Auxiliary Service' for payment of service tax under reverse charge mechanism in case of services received from foreign party. The appellant paid service tax ₹ 1,05,03,352/- for the period January 2006 to April 2010 through TR 6 challan on the commission paid by them to the foreign commission agent .....

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reply to the show-cause notice refuting all allegations and also justified the availment of Cenvat Credit. Ld. Commissioner vide his Order-in-Original dated 14.10.2010 allowed the Cenvat Credit for the period from 18.04.2006 in view of the retrospective amendment in Rule 3 of the CENVAT Credit Rules, 2004. However, the ld. Commissioner denied an amount of ₹ 14,05,091/- being the Cenvat Credit for the period prior to 18.04.2006 citing that Section 66A was brought into the statute book with .....

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iable to be set aside. He further submitted that the impugned order is non-speaking order as the ld. Commissioner has not given any reasoning for denying the credit of service tax paid under reverse charge mechanism for the period 01.01.2006 to 18.04.2006. He further submitted that the appellant were not liable to pay service tax on commission paid to commission agent located outside India under taxable head of 'Business Auxiliary Service' as defined under the Finance Act, 1994 as held b .....

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anation clause only services provided in India were taxable. There was no statutory provision or notification to the contrary. He also submitted that there was a dispute regarding the applicability of the service tax on reverse charge mechanism under Section 66 of the Finance Act, 1994 read with Rule 2(1)(d)(iv) of the Service Tax Rules, 1994. The revenue all along maintained that the assessee is liable to pay service tax on reverse charge mechanism passed with effect from 01.01.2005 even withou .....

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ctment of Section 66A of the Finance Act, 1994. He also submitted that the impugned order has not considered department's own circular which confirms that service tax paid on commission services is paid under Section 66 of the Finance Act, 1994 and its Cenvat Credit is available. The said circular no. F.No. 354/148/2009-TRU dated 16.07.2009 clarifying the stand of the department is reproduced below:- "2. The matter has been examined. The provisions under section 66A state that in case s .....

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o. The charging section remains section 66 even for the service imported. In other words, the tax collected from the recipient in terms of Section 66A is also tax chargeable under section 66 of the Finance Act, 1994. 3. In view of the foregoing, it is clear that there is no mistake or omission in the relevant provisions of the CENVAT Credit Rules, 2004 and that credit of tax paid on imported services should be allowed if they are in the nature of input services." 4. However, the ld. Counsel .....

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an abundant caution and was made only to ensure that no frivolous objection is raised to deny Cenvat Credit. He also submitted that the findings of the ld. Commissioner is beyond the scope of the show-cause notice because in the show-cause notice only allegation is that credit is not entitled as Section 66A was not mentioned in Rule 3(1) of CENVAT Credit Rules, 2004 and there is no allegation in the show-cause notice that credit is not entitled as tax itself is not payable. In support of this su .....

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R 209 (All) (iii) CCE vs. Ajinkya Enterprises (iv) CC vs. Toyo Engg. India Ltd. (v) MDS Switchgear Ltd. vs. CCE 2001 (132) ELT 405 (vi) CCE vs. MDS Switchgear Ltd. 2008 (229) ELT 485 (SC) (vii) CCE vs. Creative Enterprises 2009 (235) ELT 785 (Guj) (viii) Deloitte Haskins & Sells vs. CCE - 2015-TIOL-366-CESTAT-MUM He also submitted that after accepting the payment of service tax by the respondent, credit cannot be denied on the ground that the tax itself was not payable and on this submission .....

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submitted that the extended period of limitation cannot be invoked in the present case and therefore no penalty can be imposed as the appellant have disclosed the credits in ER-1 return and there is no intention to evade payment of tax as the appellant were under the bonafide belief that they were liable to pay service tax in terms of Rule 2(1)(d)(iv) of the Service Tax Rules, 1994 and were eligible to take credit. The said belief of the appellant was supported by various circulars and decisions .....

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the following judgments:- CCE vs. Bhandari Hosiery Ltd. 2008 (11) STR 151 Indian National Shipowners Association vs. UOI 2009 (13) STR 235 CCE vs. Lumax Samplip Industries Ltd. 2015 (37) STR 787 CCE vs. Hari Chand Shri Gopal 2011 (1) SCC 236 Parle Agro P. Ltd. vs. CCE 2015 (37) STR 385 7. I have heard the ld. Counsel for the parties and carefully perused the material on record including the circulars issued from time to time by the CBEC and also the judgments cited at bar by both sides. 8. After .....

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